With the availability of finance still a big issue for many small businesses, the government is launching another initiative to help them not only access the funds they need during these challenging times but to grow as well. Following the Small Firms Loan Guarantee Scheme and the Enterprise Finance Guarantee Scheme, the Department for Business Enterprise and Regulatory Reform (BERR) will be conducting a review to consider whether there is a role for government in facilitating public and private investment to help small businesses access capital to grow. The review, which will consult businesses, investors and government before reporting to Business Secretary Peter Mandelson ahead of this year’s Pre-Budget report, follows government promises to stimulate growth using private sector resources and expertise to bridge the funding gap. The idea is that where conventional bank finance may not match a business’ risk profile and growth aspirations, the government will leverage private sector monies to provide this growth finance and risk capital, and ensure high-growth businesses that will be very important for the economy are able to secure the capital they need going forward.
Unlike other measures announced, this initiative is encouraging in that it is aimed at helping small businesses to thrive and get back into growth mode in the long-term. It also promotes public-private partnerships and tapping into the expertise and resources of private companies, which will most benefit small businesses in the current climate. However, the government has yet to deliver on its other initiatives to date, namely the Enterprise Finance Guarantee Scheme, which has not taken off the ground and is proving difficult for small businesses to access. Therefore, small businesses cannot rely on public authorities alone to help them get through the recession.
In the absence of support from the government and banks, small businesses can help themselves by adopting best practices in financial management, such as being aware of how much money is being spent and identifying potential cash flow problems before they occur. This can be easily achieved by having processes in place to monitor and track finances, as well as to prepare a cash flow forecast.
Comments